Tuesday, September 5, 2017

Adria Airways posts record 2016 profit


Adria Airways was the most profitable national carrier in the former Yugoslavia in 2016 after posting a net profit of 3.232.971 euros, up 135% from its 9.2 million euro loss in 2015. The figure represents its best result since the airline made its first profit in 1997, with Adria's new owners delivering on their promise of steering the company back to profitability within the first year under their management. The airline achieved the numbers in large part due to the role it played in establishing Estonia's national carrier Nordica, and the subsequent partnership between two, which saw Adria provide its counterpart with a booking system, operational services and staff training, at a fee. Furthermore, the carrier profited from aircraft leasing arrangements made with several airlines during the year and the sale of two Bombardier CRJ200 aircraft, as well as spare engines. Overall, revenue grew 2% to 155.2 million euros. Adria reduced its workforce from 420 employees in 2015 to 396 at the end of last year.

Adria's CEO, Arno Schuster, noted, "2016 was a historic year in Adria Airways' history. Following a change in ownership in March 2016, Adria began shaping its future under 4K Invest. After a long period of uncertainty for passengers, business partners and employees, emphasis was put on stabilising the business in the first few months. I am very proud of the commitment and enthusiasm shown by all employees at Adria Airways during the first year of restructuring. Every one of the company's departments illustrated that it was open to change that had to be carried out in order to transform Adria Airways into a modern regional carrier. After defining the strategic tasks and objectives for each department, a number of measures began to be implemented, which required demanding time frames". He added, "With so many challenges, but also encouraging developments in 2016, Adria Airways has shown that it is ready to enter into a new phase of the restructuring process, which will be marked by growth in all business sectors. We are committed to providing our customers the most convenient way of travelling in the region and I look forward to many successful years ahead".

AirlineNet profit/loss (millions €)Change on 2015 (%)
Adria Airways+ 3.2+ 135
Croatia Airlines+ 1.9- 42
Air Serbia+ 0.9- 77
Montenegro Airlines- 11.4- 10

The Slovenian carrier handled 1.103.530 passengers in 2016, down 11% on the year before. The decline came as a result of a significant reduction in the number of operated flights, a move aimed at improving the airline's finances. Its average cabin load factor decreased from 67.9% in 2015 to 65.5% last year. Adria operated 19.470 flights in 2016, representing a decrease of 4% year-on-year. During the first seven months of 2017, the Slovenian carrier handled 672.905 passengers, representing an increase of 11%. It is currently exploring mutual synergies and efficiencies with Darwin Airline, which it purchased in July through its Swiss subsidiary and expects "substantial growth" in the coming period.

122 comments:

  1. wow congratulations Adria!

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  2. That was a quick turnaround to profitability. Well done.

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    1. Now everyone will be singing praises to 4k invest but remember when they were undergoing restructuring they cut a lot of routes and costs and passenger numbers plummeted. Similar to what Air Serbia is doing now.

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    2. The only difference is that 4K knows what they are doing and they are willing to invest. Unfortunately we can't say the same for EY.

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    3. We will see how long that lasts.

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    4. This is like comparing apples to pears.

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  3. I za koliko su prodali dva aviona i masine?

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    1. Za to se kod nas ne pita !

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  4. Again, profit was achieved by selling planes and engines...

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    1. You know that selling planes and other assets is a justified way of achieving profit.

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    2. It is. But let's not pretend Adria achieved any kind of result. We should look at Operating activities (ex Subsidies) for health of the company.

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    3. Trust me, they did not get any important amount of money for CRJ-200. Luckily they could sell it for any money at all.

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  5. I hope they will consider some new routes for summer 2018, we need new connections in Ljubljana.

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    1. I hope so to and I think they will. They started with Kiev this winter.

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    2. I wonder if anything will happen with Geneva and/or Lugano.

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    3. Well they have a surplus of aircraft now. They have to put it somewhere.

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    4. Not necessarily. JU proves it is less costly to have an aircraft on the ground.
      Maybe JP is also eying to lease out machines on short notice during winter season. But I don't think that can be too lucrative either.

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  6. It's amazing how big the loss was in 2015 taking into account they went through years and years of restructuring. That would be acceptable prior to restructuring not after. It means the previous management did a terrible job.

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    1. And the management that ran that 'successful' restructuring is now over at Air Arann.

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    2. There was no real restructuring done back then. The only thing that was done was to sell off many assets so a profit could be shown at the end of the year.

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    3. So basically the same they did in 2016...

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  7. CR2 sales plus brand name sold fot 8 mio EUR. If the 8 mio are within the 2016 calculation, then the shown results reflect a different picture

    Anyone knows: where is Arno btw, I m sure he cld explain

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  8. LF 65.5% naravno da treba pohapsiti slovenacku vladu sto omogucava ovaku prevaru slovenackih poreskih obaveznika.

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    1. Poreskih obaveznika? Adria je 100% privatna firma.

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    2. Placaju im preko iznajmljivanja imena Adria

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    3. A ajde mi pokaži neki dokaz za to

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    4. BS. I asked one anonymous last week to show some proofs for this claims and he didn't respond.

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    5. Vest je od letos na ovom blogu. Ne citate ga. Anonymous July 30, 2017 at 9:49 AM Apparently, Adria ended last year with a profit of some 4 million euros. BUT, it did have to sell the brand name for 8 million in order to post that profit. Talking about creative accounting, hehe.

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    6. This particular anonymous asked the same thing when a particular non-anonymous claimed that and did not receive any evidence.

      Therefore, I simply have to agree with the previous anon: BS.

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    7. Kao sto vidis covek je obavesten o dobiti jos u julu pa ne treba sumnjati ni u deo informacije o kupovini brenda. Koja se pojavila i u nekom svajcarskom casopisu na internetu.

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    8. Still no proof, just anonymous BS. Again, show me the proof and i'll make the thing public.

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    9. @Anonymous September 5, 2017 at 3:39 PM:
      Wrong! Not anonymous BS! Check AJPES report. It clearly states on page 99 (see note at the bottom of the page), that brand name was sold for 8 million EUR (as said by Anonymous July 30, 2017 at 9:49 AM). That means, the profit in 2016 was 147.230.453 EUR, which translates into a loss of 4.767.029 EUR. Now you can make the thing public.

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    10. @Anonymous September 6, 2017 at 12:46 PM:
      Correction: the total income in 2016 was 147.230.453 EUR (excluding the brand name sell).

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    11. Ajpes report: "Decembra 2016 je družba prodala blagovno znamko Adria Airways za 8.000.000 EUR. Kupnino za blagovno znamko plača
      novi lastnik blagovne znamke (i) z licenčnino, ki se bo odštela od nakupne cene, in (ii) po 9 letih, tj. leta 2025, preostanek
      nabavne cene blagovne znamke v gotovini. Licenčnina za koledarsko leto znaša 400.000 EUR + 0,15 % letnih prihodkov."

      Anon @ 12:46 PM is correct

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  9. They are not losing as much money as they did before which is a good thing. These guys have managed to turn the airline around. That's why they were brought in after all.

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  10. It seems the only lucrative business for Adria is its involvement in the Nordica and now they have lost that.

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    Replies
    1. Why did they let that go? What happened? Does anyone know?

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    2. LOT came with a better offer.

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  11. If a LCC based an aircraft in LJU and opened new routes Adria would be dead. Then again with the high fees at LJU this will never happen.

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    1. They said the same for Jat when Wizz Air opened a base in Belgrade and nothing happened.

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  12. So we have 2 CRJ200s, spare engines and brand name sold in 2016 which have been added to the revenue side to achieve the published results, right? We just need to find out how much Adria received for these transactions, then only we can have a clear view of the company's financials. Still, there are some clues we can track from the article and make a rough estimate. Assuming that passenger traffic affects revenue at the same rate (leasing and other revenues to be balanced by reduced yields due to decreasing traffic), company should have made nearly 135M revenue without additional revenue items this year. As the expenses amount to 152M, we can "roughly" conclude that the company would have a balance sheet of -17M without additional revenue from sales of two aircrafts, spare engines and brand name (so these transactions should be worth 20M).

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    1. +1

      There financial report does not show how much Adria made from sales of assets but it does show that passenger revenue decreased. I think also they got a lot of money from Nordica.

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    2. Finally, an objective point of perspective. It's almost funny how naive some people are. They're praising 4K as saviours of AA. Interesting thing is, less pax and worse load factor. Unfortunately Arno couldn't skew those numbers as he's done to the profit.

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  13. I'm liking more and more some of the new things the owners are doing. Mostly I'm glad they are focusing on Ljubljana and didn't give up like the former management who said there is no market in Slovenia.

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    1. Well, they're not focusing on LJU. Who said that? Just because they've added some frequencies and announced Kiev, it doesn't mean they're focusing on LJU. Remember Berlin, Stockholm, Cologne (I probably forgot some)? All gone since 4K took over. And not a single destination added.

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    2. There is no market in Slovenia, nor Croatia or Serbia. If it would, Ryanair, Easy or LH would eat it a decade ago.

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    3. @Anonymous September 5, 2017 at 4:45 PM:
      Exactly, even 4K admitted it. That's why they are focusing on the wet lease market.

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  14. It would have been best if they merged Adria, Croatia and Montenegro Airlines and kept the name Adria. That would have been a very competitive airline then.

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    1. There was a plan like that. First merge JP and OU and then bring in YM. Politics got in the way.

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    2. Croats would never accept for OU to be absorbed by JP.

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    3. Zasto ne dodas i najvecu. Ni sa njom ne bi sjajno stajali ali bi barem cartere vise radili.

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    4. It nearly happened in 2012 and was proposed by Croatia Airlines: http://www.exyuaviation.com/2015/02/croatia-airlines-adria-merger-blocked.html

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    5. It would make sense. Adria is a brand and neutral name. They could have had two main hubs - in LJU and ZAG

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    6. I think Adria and Croatia are a natural fit. Both star alliance, both EU carriers, both have similar fleets. If they became part of the same company they wouldn't have to remove the Croatia brand. They could keep their separate products.

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    7. If they called it Adriatic then everyone would be happy. :-)

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    8. I also think it would have been best to have somehow linked OU and JP together, with the support of Lufthansa. They could have created a much more competitive airline. They could have focused on Bosnia then and developed flights there too.

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    9. Their two major hubs within such short distance? That's huge economical rubbish! (Or suicide)

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  15. I assume they bought Darwin this year for 1 euro. Actually it would be interesting if Darwin cost them more than Adria which they got for a ridiculously small amount of money.

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  16. Sell sell sell. What are they going to do when they sell everything?

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    1. They still have a few things to sell ;)

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    2. Flight centre, Amadeus Slovenia, Adria Airways Switzerland aka Darwin :)

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  17. they are going to buy Montenegro, then Croatia and when Etihad pulls out of AS, thent that one too, and will make regional version of JAT, but streamlined and sell all that for peanuts to LH

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    1. I wouldn't mind that actually. All the national airlines in ex-Yu have shown they have no clue how to manage their finances, deal with huge seasonality oscillations, or capitalise on their advantages like tourism.

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    2. I think it's realistic to expect some sort of consolidation in exYu, it's only a question of time.

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  18. Who would have though for a company that had 64 million euro loss in 2010.

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  19. @admin: Everything is understandable, but I don't get it with those percent. How on earth is is calculated? There are no percentage increase / decrease which can transform -9.2 mil to +3.1 mil. If 135%, then the loss would be over 20mil eur and no profit.

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    1. Because they are calculating how much profit increased or decreased. So if you had a loss last year of 9 million and managed profit of 3 million this year, your profit margin increased 135%.

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    2. I still don't get it. If profit this year is 3 million and somebody told me that profit margin increased 135% from last year - then, I would defnitely say that last year we had 1.3 million profit. Becasue, when you add 135% to 1.3 million, you get 3 million.

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    3. Kako ne razumes da je to samo izjava CEO koji mora da zvuci optimisticno. Firma grca u dugovima. To su kupili dugove.

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    4. 9 mil X 135% = 12.15 mil
      -9 mil + 12.15 mil = 3.15 mil
      With rounding 3.15 mil becomes 3.2 mil.

      Understand?

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    5. OK, thanks; now at least I understand how they manage to came to that number (135%). But that kind of calculation is like adding grandmas to frogs.

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  20. Good to see Adria back on track. Great result :)

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    1. Not only that, they are the most profitable airline in ex-Yu!

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  21. I think Adria has done really well this year. They increased frequencies and fleet size which increased passenger numbers. They are now starting to introduce new routes which is great as well.

    The purchase of Darwin was a great strategic move and I think they can make some money from it if they make a good strategy and concentrate on that airline, something Etihad didn't do with Darwin.

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    1. "Something Etihad didn't do with Darwin".

      Or any other airline Etihad took under its wings really.

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    2. Darwin never made a penny. Every few years, before its bancrupcy it was taking over by another.
      4K got Adria for peanuts and Darwin for free.
      It will take time to talk about the sucess here. On both sides.

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  22. And so many people were writing "they are on the brink of bankruptcy".

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    1. Sta imaju jos da prodaju?

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    2. Flight centre, Amadeus Slovenia, Adria Airways Switzerland aka Darwin.

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    3. This time last year we were talking about Adria declaring bankruptcy. Now they have just bought another airline.

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    4. Adria didn't buy them, 4K did through JP

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  23. I'm glad they are getting their act together. I think competition at LJU will become bigger and bigger now. The management there is trying to attract new airlines so Adria will have to deal with this too.

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  24. I'm really surprised because the rumors were they will post a loss of around 3-4 million so posting actually a profit of 3 million took me a bit by surprise. The sale of two CRJs helped for sure.

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  25. How many bases does Adria currently have? Does it have planes based in PRN and TIA? Thanks.

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    1. Only in LJU and PRN. They used to have in Lodz and I think they might have had one in TIA but am not sure about that.

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    2. Good. I think the multi hub systems they had going for a few years wasn't really working for a small airline such as Adria.

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    3. Agree, it was unsustainable for an airline with 12-14 aircraft.

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    4. True. Focus on LJU and make the network sustainable.

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  26. LOL! JU was last profitable one! Surprise, surprese!

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    1. No, that would be Montenegro Airlines with 11 million EUR loss.

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    2. Some people here really have and unhealthy obsession with JU

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    3. Without government tax funded help JUs loss would have been -Euro39.1m.

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    4. Even more if you add other forms of aid (airport fees, jet fuel)

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    5. You might be interested to know that Adria is charged significantly less at LJU airport then other airlines. Also YM hasn't paid for anything at Podgorica or Tivat in decades. So account that to their financial results too.

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    6. I don't doubt that. By putting JU in the same bucket with YM, you said it all.



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    7. And Air Serbia pay much less in BEG than other companies but still gets 42 million subvention.

      So what is your point? Montenegro gets huge discounts, Adria gets huge discounts, Air Sebia gets huge discounst but on top of it 42 million subventions. What other companies did not get at all.

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    8. In 2016 Adria got 3 million euros from the Slovenian government. That was the condition under which 4K bought Adria. Adria also benefitted from three public capital injections in 2007, 2009 and 2010, amounting to around 15.2 million euros. In 2011 it received 50 million euros in state aid.

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    9. Mrtva trka u regionu :-). Ne zna se ko je bolji.

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    10. Ann 2:20 that is so not true. It was 3 million for old debts like Serbia gave 245 million.

      In 2016 Adria did not get any subvention for operations unlike Air Serbia with 42 million.

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  27. Not a big profit but respectable.

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  28. Considering how much their ticket price increased, I'm not surprised.

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  29. It is great to see how Adria is recovering nicely. With them purchasing Darwin they are in a really strong position. What a change on just a year ago.

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  30. It's a shame they don't release any financial details on their purchase of Darwin Airlines.

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    1. Zasto bi? 4k je privatna kompanija. Sumnjamo da je upletena slovenacka vlada, ali mi nismo finasijski istrazitelji.

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  31. I quickly went through their annual report (publicly available through AJPES with free registration) and it's a mixed bag. Their liquidity ratios are improving but are still dismal (then again I'm sure this is true for many airlines), they have negative cashflow from operations, which is worrying, but their revenue base is growing and costs are being controlled. They do post a profit from operations, but this is still too inflated with one-offs that it's not realistic, they are still making a loss form their base operations. However, their numbers are improving. Let's just hope they manage to continue on this path and post a true profit from operations in the coming year or two.

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    1. sve kompanije na balkanu ne mogu da se izvuku iz gubitaka. ni wizz koji preprodaje nove avione. ceo biznis puca na jeftinim kartama. to je ubaceno u uvo potrosacu i nema nazad. LH daje kartu BEG za NYC za 380 jura sa njihovim a380, besmisleno.

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  32. lol at Slovenian media which still haven't published anything about this.

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    1. Eh... Adria didn't issue press release yet so they don't know it's even been published.

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  33. Speaking of Adria, this afternoon the first Adria Switzerland coloured plane appeared but its in a hybrid livery since it still has the Etihad logo

    https://www.flickr.com/photos/134062278@N02/36191555114/

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    1. What a mess! Adria, Etihad logo and two Swiss flags. Is there room to put anything else up there?

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    2. Yes! They should put back that "Lugano" sticker. Would fit nicely.

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  34. Good to know really. I think they managed to convince the investors and came out with a successful business plan. Cash was injected and the results are now out. Well done JP.
    JP can serve as a good example for the rest of loss-making airlines.

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  35. Croatia Airlines, kao i Adria Airvays, za svaku pohvalu doprinose dobrom poslovanju Zagrebackog i Ljubljanskog aerodroma. Jos ako uspesno mogu privlaciti i dovoljan broj putnika u zimskom periodu... To bi bilo zaista zaokruzena prica. Istina, takav scenario svaki iskren i dobrodusan covek zeli. Kraj zimske sezone ce potvrditi nastojanje vasih avio prevozioca.
    Ipak Air Serbia se reformise u logicnom smeru. Da ima manji broj zaposljenih po broju zaposljenih na broj sedista svoje flote. Da nebih poreznici hranili visak personala. Dolazeca koncesija Nikole Tesle neminovno ce uticati na rast i koncept Srpske nacionalne avio kompanije. Sa nadom u dinamicniji razvoj Civilne avijacije Srbije, ukljucenje Kaljevackog aerodroma Morava i Uzicke Ponikve u mrezu aktivnih aerodroma. Svima topli pozdrav.
    NAMA DOBRO I NIKOME ZLO!
    Iz jesenjeg Kraljeva,
    Rodney Marinkovic 😀🇷🇸😀🇭🇲🌐🇭🇲🇷🇸😀🗺

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  36. It's clearly obvious that the new owners are trying very hard to present the company as a profitable one in the shortest possible timeframe. Hence the brand name sell. Adria ended 2016 with a loss of 4.7 million euros. It's better than the year before, but it's still a loss. My guess is, they are trying hard to get rid of Adria as quickly as they can. That's why they "bought" Darwin (It was probably free anyway).

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    ReplyDelete

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